Conventional systems assign credit limits to customers in a two-step process. First, credit issuers, such as a credit card issuer, identify potential customers based on information from credit bureaus. That information may include, for example, past credit history, prior declarations of bankruptcy, and the like. Once the issuer identifies potential customers, the credit issuer may offer credit or financial products to them. The offer typically includes a credit limit. The issuer usually selects the credit limit based on a tolerance level for the particular customer (i.e., an amount the issuer can afford to risk on a potential customer.) Once the customer responds to the offer, additional information is obtained and a final decision is made based on the customer's credit bureau information and specific behavioral and demographic data.
Second, after a period of time (e.g., six months, one year, two years, etc.), the issuer may consider whether to increase or otherwise adjust a customer's credit limit by studying the customer's past performance. For example, if the customer has demonstrated the ability to make timely payments, the issuer may increase the customer's credit limit. Otherwise, the issuer may decide to hold the credit limit at its current level or even decrease it, if needed.
Several problems exist with respect to such conventional systems. For example, a credit issuer typically grants a high initial credit limit based on credit bureau information. While the credit bureau information is generally accurate, it does not comprehensively reflect a customer's credit behavior. In other words, even customers with exemplary credit information may use all of their available credit without making any payments, resulting in possible loss to the credit issuer.
Another problem involves the long time period that may transpire before a credit limit increase is granted by the credit issuer. Because the initial credit limit is typically large, credit issuers usually wait a long period of time before even considering a credit limit increase. This can result in a loss of customers, if customers' requests for credit limit increases are denied or delayed.
Therefore, a need exists for assigning credit limits using an approach that more accurately determines and assigns credit limits reflective of the credit risk of a customer, and that can provide for rapid evaluations and credit limit increases.